PESTLE Analysis of Toyota Motors has revealed significant opportunities and some pertaining threats prevalent in the working of the company. The threats and opportunities are identified by examining the external factors around the company’s business. For many decades, the company has been playing a leading role in the automotive and industrial sector. The workforce of more than 300,000 indicates the upper-level organizational size and capacity to conduct business operations. Nevertheless, the company must address threats besides exploitation of the opportunities in its macro-environment. This analysis has shown that diverse opportunities and threats are affecting the business environment and, in turn, the effectiveness of the company. This analysis exerts that the company’s management must devise effective policies and strategies to cope with these factors so that it may retain and improve its position as a global leader in the automotive industry.
The prevalent threats and opportunities are exposed by examining the following PESTLE elements so that the company may be able to enjoy the dominant position for the long-time.
Political Factors Prevalent in business
Toyota is prone to the effects of political and governmental policies. This section of the analysis reveals the existing political forces in the company’s business. The following discussed political factors revealed PESTLE Analysis has a significant effect on the working of the company:
- Stable markets in developed nations (opportunity)
- Unrestricted trade treaties (opportunity)
- New wave and Political support for Eco-friendly vehicles (opportunity)
The company has the advantage of stability in the markets of developed countries. This political stability ensures the smooth operations of the company. Moreover, the unrestricted trade treaties among the developed nations promote the company’s business in stable economies like Japan and, thereby, can further penetrate the market. Even more, the current wave of eco-friendly operations and, thereby, services hold another opportunity for the company. The company can significantly improve its business and brand image by adhering to environmentally friendly solutions. Therefore, given the above factors, the company has significant opportunities to grow and improve its business and global position.
Significant Economic Factors
All companies depend on the prevalent economic indicators for growth and stability. Toyota’s organization is dependent on economic conditions and trends. This section of the analysis reveals the economic factors and their effect on the business of the company. The prevalent economic factors in the external working environment are given below:
- Feeble Yen Vs. Dollar (opportunity)
- Stability in US economy (opportunity)
- Robust growth of markets in developing nations (opportunity)
The company can benefit by importing more from Japan as the Japanese Yen has a low value against the US dollar. Toyota has another opportunity to stabilize itself in the long-term due to the stable US market. This is especially beneficial for long-term stability and growth as the US market is the second biggest market for the company after Japan. The firm can further exploit the developing markets to gain market share and revenue. The emerging markets in Asia and many African countries have the potential to grow with large populations. Therefore, the overall economic factors present opportunities to the company for immediate and long-term growth.
Effects of Social/Sociocultural Factors on the Company
The social/sociocultural factors prevalent in the external working environment of Toyota Corporation are discussed in the segment. The analysis brings forth dominant opportunities and disruptive threats in the company’s business:
- Growing market of hybrid vehicles (opportunity)
- Swelling interest in electric cars (opportunity)
- Broadening wealth gap (threat)
The company has an opportunity to widen its scale of operations due to the swelling demands for eco-friendly hybrid and electric vehicles. The rapid decline in the middle class due to the widened wealth gap is posing a threat to business. The decline in the middle class can deteriorate the company’s business position as this class is major Toyota’s customers. Therefore, Toyota must shrewdly devise a strategy to handle this threat.
Technological Factors Affecting the Company’s Business
These factors have the potential to boost or undermine business growth as the automotive industry is based on technology for advancement. This section explores the effects of technology on the external environment of Toyota Corporation. The most dominant technological factors which can affect the company’s work are discussed here:
- Growing trends of e-commerce (opportunity)
- Use of Mobile Technology in sale/purchase (opportunity)
- Intensifying cybercrime bullying (threat)
The company has the opportunity to grow its business and revenues by adhering to the novel e-commerce business techniques. It can potentially increase its revenue by using this technique, especially in the sale of spare parts or related products. Furthermore, Toyota can increase its revenue by engaging more customers using mobile apps. These technological trends have revolutionized business during the past decade. The threats of cybercrime are increasingly threatening the security of businesses. The company can increase customer engagement as well as loyalty by using these technological trends.
Legal Factors affecting Toyota’s Business
The legal systems can affect the working of the businesses. This segment of the analysis reveals the impact of regulations and laws that are prevalent in business operations and thereby affect growth. The imperative legal factors which affect the working of the company are discussed below:
- Concerns about intellectual property laws (opportunity)
- Complex Environmental Regulations (opportunity)
- Complicating consumer laws (opportunity)
The company has another opportunity to grow without any harm from theft of their ideas or product designs. Governments around the world have increased the regulations relating to securing intellectual property rights and their execution. The company has another massive opportunity to give quality products capable of the environment due to the increased environmental regulations. The consumer laws demanding the safety of the customers and products pave the way to improve the brand’s reputation and image. Therefore, the overall effects of legal factors on the working of the company are seen as opportunistic by this PESTLE Analysis.
Environmental/Eco Factors
The company needs to include ecological aspects in strategic decision-making and policy making. This section of PESTLE Analysis reveals the effect of the natural environment on the working of the company. The subsequent discussed ecological factors are affecting the business of the company:
- Climate change affects (opportunity)
- Rapidly reducing global oil assets (opportunity)
- Stress on the sustainability of business (opportunity)
The company has the opportunity to grow in the market by adhering to the new trends of using hybrid or electric cars, which are more environmentally friendly as well as more economical in usage. Toyota must ensure long-term sustainability to satiate the rising eco-friendly orientation of the business. This segment of the analysis has revealed the business threat and opportunities given by the external factors of the environment.
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